The combination of recent refinery problems, the weakening dollar, speculative buying, and rising global demand will cause a precipitous spike in crude oil and its products.
In Scotland, we got news that workers walked of the job at a major North Sea oil pipeline that produces over 700,000 barrels of oil a day. It is estimated to cost over $100 a-day in lost production. Furthermore, two of the largest oil companies cut production by an unspecified amount at their Nigeria Niger Delta refinery due to militant attacks. Nigeria, the worlds 8th largest supplier of oil has suffered four pipeline bombings last weak further tightening world production. According to recent studies, world crude oil supplies are already down 6% from a year ago. The politics of the Middle East still remain tense, as seen last week’s incident with Iran. Roughly 20% of the world’s oil flows through the Strait of Hormuz that Iran has the ability to block. This married with the weakening dollar and the speculative inflation hedge further puts upward price pressures on crude oil and its products.
$125, $130?? In the short term i see higher prices, however, in the future, due to the politics of the market i do see a pullback in prices.
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